The DTIC has issued a directive to ITAC to investigate the creation of a temporary rebate as follows:
“Textile fabrics, classifiable in Section XI, for the manufacture of articles of apparel and clothing accessories, classifiable in Chapters 61 and 62, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the fabric is not specifically covered by another rebate provision in Schedule No. 3 for the same industry and purpose”.
Such a rebate, if created, would be subject to conditions such as:
- ITAC may limit the rebate provision to a list of qualifying fabrics, should it be deemed necessary. Such list to be determined and published by ITAC on its website, which is aligned and attached to reciprocal off-take commitments as identified by the DTIC, within the ambit of the Retail – Clothing, Textile, Footwear and Leather (R-CTFL) Masterplan.
- Current volume and value off take from local Textile Mills not to be reduced
- Develop opportunities to deepen the value chain
- Price Restraint
- Time-limited basis/Rebate review
Reasons provided for the review
- Under the R-CTFL Masterplan, Government has committed to creating an enabling environment for investment and growth in the industry. In particular, commitment four calls for strategic use of tariffs and rebates.
- Action points under commitment four include, inter alia, the review of rebate provisions on imported primary materials and components to support localisation of manufacturing, subject to:
- Demonstrated, measurable and enforceable employment and investment growth benefits;
- Future rebates subject to strict conditions (e.g. Bargaining Council compliance, tax compliance);
- Effective enforcement to prevent abuse; and
- Taking account of employment and production across the value chain, including textile
- The Government has been approached by retailers in the clothing sector, who have highlighted challenges in obtaining sufficient apparel due to disruption in their supply chains due to the spread of the COVID-19 virus. These issues were ventilated at inaugural Executive Oversight Committee meeting on the 12 March 2020, which was attended by representatives across the Retail, Clothing, Textile, Footwear and Leather value chain. Stakeholders have advised that appropriate rebates would support accelerated localisation of apparel manufacturing in South Africa.
The Minister has deemed this to be urgent and ITAC have therefore only given until 7 September 202 to respond.
Of some concern is the requirement around Bargaining Council compliance as this heavily favours the larger producers who can afford to pay higher wages. Smaller producers are often not able to match those wages and now having yet another differentiator favouring larger companies will place further pressure on the smaller producers.
It is also not clear how producers in Lesotho, a significant producer of apparel, will be impacted as they are part of SACU but are not bound by our labour laws.
If you manufacture apparel in the SACU region, it is critical that you respond to this review. If you need help, contact us on email@example.com.